Originally Posted by Geoff Moore

I don't think the FED should even exist obv. but given that it does I am trying to figure out the best way to utilize it

Get them back to doing what the original mandate was for, namely price stability and the preservation of the value of the dollar. Once they got into the business of also trying to stimulate job growth, the harm they do grew exponentially.

Originally Posted by Dyzalot

Get them back to doing what the original mandate was for, namely price stability and the preservation of the value of the dollar. Once they got into the business of also trying to stimulate job growth, the harm they do grew exponentially.

I think the FED is directly connected to job growth whether we like it or not (yet another reason the FED needs to go away)

Originally Posted by saxman

LOL I saw that. No inflation. Yeah. Explain the market then. Explain commodities. Explain food prices. Explain energy prices. Explain why when our economy contracts we don't see a corresponding contraction of the money supply and deflation of prices and wages. Proves critics wrong though... Its easy to make it look like there is little to no inflation when the government keeps fudging the numbers by not including food and energy and by using arbitrary formulas that change over time.

The policies that the Fed embarked on in late 2007 are a sharp departure from the old way of performing monetary policy. In fact, it is difficult to state that the Fed is any longer in the business of traditional monetary policy — understood in the United States as aiming for low inflation and smoothed output volatility. A new breed of monetary policies better referred to as "quasi-fiscal" policies has become the norm.

Originally Posted by Dyzalot

LOL I saw that. No inflation. Yeah. Explain the market then. Explain commodities. Explain food prices. Explain energy prices. Explain why when our economy contracts we don't see a corresponding contraction of the money supply and deflation of prices and wages. Proves critics wrong though... Its easy to make it look like there is little to no inflation when the government keeps fudging the numbers by not including food and energy and by using arbitrary formulas that change over time.

It is crazy because the inflation seems obvious to consumers, but that means housing prices are even lower than they appear. I don't mind the dollar losing ground for now, because it basically means my debts are shrinking without having to do anything. Under the current circumstances where the fed continues to "make it rain", I don't understand why people are so concerned about the deficit. I can't understand why people continue to lend here at all.

Mr. Garrett (R-NJ) was fucking awesome. He brought up a lot of valid points and didn't just blow Bernanke like everyone else on the panel was doing.

Why when FSOC (Financial Stability Oversight Committee)meets do they have a private meeting and then a public meeting? If the heads of all of the financial regulatory committee get together and talk about potential financial crisis's shouldn't all of that information be public?

Is it possible to get an accurate impression of the health of the economy? There are so many contrasting indicators that it seems like the system is being heavily manipulated which makes any kind of long term prediction futile. I would like to think that the growth indicators in the market are signs of recovery and the rest is just trying to catch up, but my skepticism keeps leading me to believe that it is just more of the same, where money is being pumped in by the fed and the natural system is still trending down. People are still getting laid off, salaries seem to be trending down, housing prices are still low, interest rates are record low, etc.

Originally Posted by Dyzalot

Because his policies make the economy look better than it is. If someone else came in and raised interest rates, it would be a good long term policy but would not be good short term for the stock market or housing numbers. Having both of those numbers look as good as possible is important to getting Obama re-elected.

Although I agree it would probably be bad for stock and housing markets. It's not like it is universal among economists that increasing rates would be good for the long term.

Originally Posted by P0KERDUUDE

Yeah...they always wanna tell you 8.3% unemployment! We're doing a good job!!! But if you know how unemployment is calculated, you would know that it is not true and the real number is upwards of 11% and and high as 15%.

that is wrong. The trend is the same no matter what workers are included. see my post below. The graphs are gone, but feel free to look at the data for yourself.

Originally Posted by saxman

do you know why commodities are not included in the CPI inflation measurement? i'm sure you do

How volatile someting is makes no difference when looking at inflation over the long term. Ignoring housing, food and energy prices when figuring inflation rates makes a mockery of the measurement. I doubt poor people or the elderly on fixed incomes care much that prices on computers and plasma tv's aren't rising that fast.

The people who loaded up on oil when it hit $148/barrel at the end of 2008 wouldn't be too happy with that purchase today. The people who loaded up on gold yesterday wouldn't be too happy with losing 5% of their value today. That silver coin that Ron Paul waved around may or may not have been a good value play depending on when he bought it and when he intended to tender it for purchasing something else. They are unpredictable and unreliable as a bench mark for inflation, that is why they are not used.

Originally Posted by saxman

The people who loaded up on oil when it hit $148/barrel at the end of 2008 wouldn't be too happy with that purchase today. The people who loaded up on gold yesterday wouldn't be too happy with losing 5% of their value today. That silver coin that Ron Paul waved around may or may not have been a good value play depending on when he bought it and when he intended to tender it for purchasing something else. They are unpredictable and unreliable as a bench mark for inflation, that is why they are not used.

Inflation is an increase in the money supply, not an increase in prices. The vast increase in money supply over the last few years hasn't started alarm bells ringing quite yet, but a bubble will form somewhere eventually, just like it did last time interest rates were artificially low for an extended time. How did that housing bubble your boy Krugman hoped for turn out?

Krugman predicted the housing bubble along with a dozen or more prominent economists, as I'm sure you know. Unfortunately, GWB early on in his stay decided that it was his goal for every American to be able to own a home regardless of their income or wealth standing. The real estate speculators sure took advantage of that situation. Sad but true.

That makes no sense. Inflation is supposed to measure the rise in prices, not the rise in prices when there is no volatility. People who bought oil 20 years ago for $10/barrel would be pretty happy today as would those who bought gold then.

Originally Posted by saxman

Krugman predicted the housing bubble along with a dozen or more prominent economists, as I'm sure you know. Unfortunately, GWB early on in his stay decided that it was his goal for every American to be able to own a home regardless of their income or wealth standing. The real estate speculators sure took advantage of that situation. Sad but true.

Krugman predicted it long after the economists of the Austrian school predicted it.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

hahaha nice try but i'm familiar with the actual quote and what he was trying to say - that is, according to the dogma of the political right, if we were to be invaded by aliens, we would have no problem at all spending money (stimulating the economy) visa vi another arms race or military intervention. I fully understand that Ron Paul does not support the military approach to stimulating the economy any more than he does in fixing broken windows, but lets at least be fair about it.

btw - shout out to my friend Yomama. Haven't seen you around much. Are you still in MUX since the merger? I lost a few loonies today.

Originally Posted by Dyzalot

Get them back to doing what the original mandate was for, namely price stability and the preservation of the value of the dollar. Once they got into the business of also trying to stimulate job growth, the harm they do grew exponentially.

I don't give a shit about the value of the dollar (unless someone can convince that I should within realistic variations; I don't mind inflation), but I agree that price stability aka velocity of circulation should be the paramount focus of the fed. I think that is all they should be concerned with. I think that is a vital part of the economy that the fed should play a role in. The problem is it/he thinks they can positivity affect the economy in other areas. I have no doubt that Bernake is much smarter and much more knowledgeable about economics than I am, but I very much doubt that he has so much knowledge that he can steer the economy to any positive outcome with so many goals. I have yet to see any argument that an active fed like the one we have now is beneficial. That's not keynsian economics, which I think is unfairly derided, or as far as I know in keeping with any economic theory. It's a shame that the only political voices either want to abolish the fed or to keep it as going.

Originally Posted by saxman

have to watch it another time Dyz - gotta head out for band tonite

I don't think the video is going anywhere. It is a pretty easy watch too as he has a good speaking style.

Originally Posted by keylight

I don't give a shit about the value of the dollar (unless someone can convince that I should within realistic variations; I don't mind inflation), but I agree that price stability aka velocity of circulation should be the paramount focus of the fed. I think that is all they should be concerned with. I think that is a vital part of the economy that the fed should play a role in. The problem is it/he thinks they can positivity affect the economy in other areas. I have no doubt that Bernake is much smarter and much more knowledgeable about economics than I am, but I very much doubt that he has so much knowledge that he can steer the economy to any positive outcome with so many goals. I have yet to see any argument that an active fed like the one we have now is beneficial. That's not keynsian economics, which I think is unfairly derided, or as far as I know in keeping with any economic theory. It's a shame that the only political voices either want to abolish the fed or to keep it as going.

Can you explain the difference between maintaining the value of the dollar and maintaining price stability? Inflation is bad because it hurts savers and rewards debtors. We had zero inflation for the hundred years prior to the federal reserve.

Originally Posted by Dyzalot

Can you explain the difference between maintaining the value of the dollar and maintaining price stability? Inflation is bad because it hurts savers and rewards debtors. We had zero inflation for the hundred years prior to the federal reserve.

Yes, very poorly. When maintaining the value of the dollar is brought up, I mainly just think about exchange rates which I fail to see the importance of (again, within any realistic range). I think a small level of inflation is good for the economy as it facilitates investment (this might irk you and it's a fundamental disagreement that I don't think will be resolved). Anyone with a mortgage or a small business loan should agree with this. Hyperinflation, as I see it, can only occur with an activist government.

I see price stability as being tied to the circulation of money, completely separate from inflation. The housing bubble was a result (there were many causes, but this was the result) of spending and saving being out of whack. The fed could could have and should have slowed this down.

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